So who’s to blame for this mess?

We can point fingers all day, but lets look at who’s responsible for what in any given real estate transaction. A lot of other things go in a real estate transaction, but for the sake of readership, I name these 8.

1. Realtors find the home for the buyer, assuming the buyer has been prequalified
2. They qualify the buyer; look at pre-approvals and pre-quals from lenders.
3. Based on this information, Realtors then recommend a suitable home based on the buyer’s needs and affordability (based on lender’s recommendation)
4. An offer is made, negotiated and accepted and the buyer applies for the loan
5. Inspections are done, negotiated and buyer moves forward to closing
6. Meanwhile, the lender is moving the loan through the approval process. What’s going on here? Realtors don’t know because we’re not in the lending business.
7. The loan goes through underwriting and whatever happens during this process. When my termite guy is inspecting the crawl space, I don’t ask him if he inspected the joists, that’s his business not mine. I use the guy because he does a good job and is reputable.
8. We go to closing, lender sends loan package and viola, deal is done.

As a Realtor, you’re only as good as the people you work with.

A lot of times, we don’t pick the lender, the buyer has already found them. I wish I could get all of my clients to use my preferred lenders, the same way I’d like them to choose from my preferred inspectors.

So is it the responsibility of a Realtor to look at the aspect of a loan and decipher it?

I don’t go into the crawl space after my termite guy and see if he properly inspected the joists. I operate under the assumption that he is doing the job that he’s licensed and paid to do.

Who recommended this loan anyway?

If you sold your client a loan to make a higher commission, instead of a loan with better terms and rates, then your not looking out for your client’s best interest. Sure lenders were out there saying, “You can refinance in two years and get that ARM off your back.” Or “Here’s what your payment will be”, without even mentioning the resetting of the rates! This has happened to relatives and friends of mine, and I even mentioned in my other blog post, how my mother’s lender tried to get her re’fied on an ARM when she clearly stated she wanted a fixed rate. Can you blame a Realtor for predatory lending? I’m not saying all lenders are at fault, but there was some double dealing going out there.

American Exuberance

There were crazy times in when housing was booming, lenders got exuberant- they were pushing loans like a crack dealer in an alley, and not thinking about the consequences. Rising demand led to higher prices and higher loans.

Now that crystal ball has fallen and shattered in a million pieces, spilling out the economy with it.

Solution

My solution is to freeze all rates at certain number. Now is the time to keep families in their homes, not foreclose on them. Freeze the rates, reassess home values and set the loans back where they should have been in the first place